How Does Performance-based Compensation Work?

By Robert J. Grossman
LIKE SAVE PRINT
Reuse Permissions

April 2009 CoverIf the stock price increases a dollar, the executive reaches the threshold and is eligible for compensation; for every additional dollar the stock goes up, the executive rakes in the money. He or she gets a prorated amount, determined by a formula set in advance, until reaching the target. Achieving the target entitles him or her to 100 percent of pay for performance. If the executive achieves somewhere between threshold and target, he or she receives proportional compensation. Exceeding target and reaching a pre-set maximum entitles the executive to an amount that exceeds 100 percent of target. Some proxy statements provide for 120 percent of the target.​

LIKE SAVE PRINT
Reuse Permissions

SHRM-CP/SHRM-SCP EXAM

The application deadline is October 21

Apply Today

Job Finder

Find an HR Job Near You

SPONSOR OFFERS

Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 3,200 companies

Search & Connect